Published on: 4th March 2024

How You Can Provide for Your Vulnerable Child After You Pass Away

When writing a Will, the majority of testators leave their estate to the children. This is very common, and most of the time, relatively simple. However, matters can become complicated when one or more of the testator’s children are vulnerable or disabled. Parents may worry that their child’s inheritance will be wasted, or that their child may be taken advantage of after receiving a substantial amount of funds. Another concern many parents have is how an inheritance would impact their child’s means-tested benefits. Our consultants have listened to a large number of clients who express these concerns, and we have a solution.

The Vulnerable Persons Trust (VPT)

This is a type of trust that protects assets for the vulnerable or disabled child / beneficiary. It is extremely popular with clients whose child meets / children meet the requirements for a disabled person under Schedule 1A of the Finance Act 2005 as it does not affect any means-tested benefits that the beneficiary may be in receipt of. It is a brilliant solution for client’s whose children simply would not be able to manage their affairs and finances under the Mental Health Act 1983.

The testator would need to appoint Trustees to manage the VPT. Perhaps another one of their children, or a sibling. The assets can only be used to benefit the vulnerable person meaning that the testator can be confident that the funds they wished to allocate to their vulnerable child will be used to support them. How the funds are used is very dependent on the needs of the beneficiary. For example, if the beneficiary is capable of living independently, the Trustees may advance funds for a house deposit or rent. If the beneficiary is not able to live alone, the Trustees could pay for things to support them from the supplier, such as a new wheelchair. The VPT ensures that the testator does not have to worry about their child’s finances, as there will be trusted people, appointed by themselves, helping to manage the assets in trust for the benefit of the vulnerable individual.

Discretionary Trust (DT)

If your child does not meet the requirements for a VPT, there is also the option of a DT. This is far more flexible than a VPT and like the VPT, will not impact means tested benefits if the Trustees are careful. The Trustees have the ability to appoint other beneficiaries and distribute funds for them, as they see fit. For example, if the testator’s vulnerable child had a child of their own, the Trustees could choose to advance funds to them instead. There is usually a Letter to Trustees from the testator, outlining how they wish the assets to be used. They may ask that the Trustees consider distributing the assets to another person if their child’s vulnerability is caused by substance abuse and they relapse. This letter is personal to each testator dependent on the circumstances, and it should be remembered that the trust is discretionary so the Trustees are not required to look to the letter as a ‘rule book’ but to regard it more as a ‘guide book.’

If you would like to speak with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

======================================

If you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney, or Trusts then we will carry out a telephone or Zoom appointment.

However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting then we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover. To see the areas we normally cover please click here.

To arrange an appointment please telephone 01732 868190 or click here.

======================================

Back to all news